Sun Life Financial Reports Fourth Quarter and Full Year 2016 Results
Toronto - Sun Life Financial Inc. announced its results for the fourth quarter ended December 31, 2016. Fourth quarter reported net income was $728 million. Fourth quarter operating net income(1) and underlying net income(1) were $732 million and $560 million, respectively.
"Our fourth quarter closed out a year defined by an intensified commitment to our Clients and significant progress on several fronts for Sun Life," said Dean Connor, President and Chief Executive Officer, Sun Life Financial. "I'm pleased with the execution of our digital and wealth initiatives in Canada, our sales momentum in Asia, the scaling and integration of our U.S. operations, and strong long-term investment performance in our asset management businesses."
"In 2016, we achieved underlying net income of $2.3 billion, raised our common share dividend twice, and generated 12.2% underlying return on equity," said Connor. "We also generated strong topline growth, increasing insurance sales by 27% and wealth sales by 14% for the year compared to 2015. Total shareholder return was 24% for the year."
"During the quarter we announced industry-leading underwriting and product changes in Canada that increase access and make it easier for Clients to do business with us," said Connor. "We also continued to improve our digital touchpoints and solutions, from new mobile apps to advanced analytics that provide Clients with proactive and relevant advice and prompts to meet their unique needs. In recognition of our focus, Sun Life earned the highest overall score in Forrester's annual Canadian Life Insurance Digital Sales Functionality Benchmark."
Fourth Quarter Operational Highlights
A Leader in Insurance and Wealth Solutions in our Canadian home market
Total Canadian sales were strong and increased compared to the fourth quarter of 2015 in each of our businesses. Individual insurance sales doubled over the same period in the prior year in anticipation of the tax legislation changes effective January 1, 2017. The increase was driven by Career Sales Force and third-party sales, particularly of participating permanent and universal life products.
Individual wealth sales of $1.5 billion were up 8% in the fourth quarter. We continued to experience solid growth in sales of our wealth manufactured(1) products including SLGI(2) mutual funds, Sun GIF(3) segregated funds, and payout annuities. These increases were partially offset by a decrease in sales of non-SLGI mutual funds.
Group Benefits and Group Retirement Services sales increased compared to the fourth quarter of 2015, primarily due to several large-case sales.
A Leader in global Asset Management
MFS Investment Management ("MFS") had AUM of US$426 billion as at December 31, 2016. Gross sales were US$19.8 billion in the fourth quarter of 2016 and net outflows were US$9.5 billion. Rebalancing by institutional Clients was the largest driver of outflows. An increase in non-U.S. retail redemptions, which were in line with the industry as a whole, was an additional contributor to the higher net outflows when compared to the previous quarter.
In the fourth quarter, we experienced asset depreciation of $5.6 billion reflecting the decline in fixed income and non-U.S. equity markets. MFS remains focused on long-term retail funds, where performance remained strong: 61%, 75% and 97% of MFS's U.S. retail mutual fund assets ranked in the top half of their Lipper categories based on three-, five- and ten-year performance, respectively, as of December 31, 2016.
Sun Life Investment Management had AUM of $53 billion as at December 31, 2016. Strong net inflows of $2.3 billion in the fourth quarter were driven primarily from Prime Advisors Inc. During the quarter, the Bentall Kennedy group of companies ("Bentall Kennedy") continued to expand its product offerings by creating products that are complementary to its core Canadian and U.S. diversified property funds.
A Leader in U.S. Group Benefits and International high net worth solutions
Sales in Group Benefits increased 32% compared to the fourth quarter of 2015, following our U.S. employee benefits business acquisition in 2016. Year over year, collectively, sales in the life, disability, and dental product lines doubled, and Disability Reinsurance Management Services sales remained strong.
A Leader in Asia through Distribution Excellence in Higher Growth Markets
SLF Asia individual insurance sales increased by 36% over the fourth quarter of the prior year, with growth in all markets. These results were driven by organic growth across the region as well as our increased ownership of businesses in India, Indonesia and Vietnam. Strong wealth sales were led by growth across India, Hong Kong and the Philippines.
We continued to invest in our Asia business during the quarter, and completed a transaction to acquire the remaining 25% share in Sun Life Vietnam Insurance Company Limited.